In this blog, CReAM Researchers and CReAM Fellows comment on recent events and on the current political debate. Below each article you can add comments.

Wednesday, 6 May 2015

Analysis: The migration conversation

by Ian Preston

What do the election manifestos say about migration? Ian
Preston, professor of economics at University College London, gives his
analysis.

Of the five main nationwide parties, three – UKIP, the
Conservatives and Labour – emphasise in their manifestos a need to deal with the negative
aspects of immigration. UKIP argues that the high inflows of the past two
decades have damaged labour market prospects of the British-born and placed
pressure on public services. By withdrawing from the EU, it proposes to
introduce a visa system covering migration from all sources which would place a
five-year moratorium on any unskilled migration and heavily restrict the
numbers of visas issued for high-skilled labour.

The Conservative Party also stresses the harm to public
services and re-endorses an aspiration to cut net migration to the tens of
thousands. Labour, without committing itself on whether or not such concerns
are justified, acknowledges a need to address public concern on labour market
and public service effects. None of these propose any significant
relaxation and all propose at least modest tightenings in certain respects.

By contrast, the Liberal Democrat and Green manifestos
concentrate on the positive side of the free flow of people. Their policies are
correspondingly modestly liberal, at least proposing to reverse some
tightenings introduced by the outgoing government. Both would reintroduce some
sort of post-study work visa for foreign students, scrapped in 2012. The Greens
would also scrap minimum income requirements for spousal immigration, a measure
brought in during 2012.

The labour market impact of immigration is something that
economists have studied in depth in many countries. Little persuasive evidence
has emerged to support a picture of adverse effects on average wages or on
employment, either in the UK or elsewhere. Economies appear to have many ways
to adapt to absorb changes in the size and composition of the labour force
without native employment or average wages needing to suffer. Immigrants to the
UK are typically young and well-educated but nonetheless work, at least in the
early years after arrival, towards the lower end of the wage distribution. If
there are any negative effects on wages, they are probably felt here, albeit
that such effects if they exist are small and probably temporary. Some of the
manifestos do show particular keenness to address effects on the least well
paid.

Immigrants make use of public services and rapid changes in
numbers may involve costs of adjustment. However, evidence suggests that
immigrants use public health services no more intensively than natives, that
the presence of non-English speaking children in schools does not hinder
education of native children and that immigration is unassociated with
increases in crime. Nor do immigrants draw heavily on welfare benefits; on the
contrary, recent immigrants are less likely to claim than natives. Empirical support
for the idea of extensive welfare tourism is tenuous.

What immigrants do do is pay taxes and they do so to an
extent that means that, broadly considered, the net fiscal contribution of
immigrants since the turn of the century has almost surely been positive,
particularly in regards to immigrants from within Europe but also those from
outside. This is at a time when there have been large public deficits. From the
point of view of public finance, immigration therefore helps relieve the burden
of public service provision rather than adding to it. Of course, over time,
young and healthy immigrants will age and draw more heavily on the public
sector, but some will return to their place of origin and those who stay will
raise children who will help pay for their needs.

These are not the only economic effects of immigration.
Suggestive evidence from the US and elsewhere points to the positive
contribution free movement can make to innovation, trade and entrepreneurship.
None of these issues figure in the discussion within the manifestos but their
importance is possibly greater than any of the feared labour market or public
service provision effects which do seem to concern the parties.

It is understandable that immigration can give rise to
public concern because its problematic aspects may be the most immediately
visible. When an immigrant, say, takes a job that might have gone to someone
British-born or sits ahead of someone British-born in the wait to see a doctor,
this is more easily observed than when the same immigrant creates demand for
work by spending their income or helps fund public services by paying their
taxes. Failing to address public concern may leave it to grow and will
encourage public disillusionment.

Nonetheless, if one looks at opinion survey data, not only
in the UK but across Europe, then one has to doubt whether economic issues are
at the root of most public disquiet. Although it is the older, less educated
voters – those arguably most vulnerable to labour market competition or most
dependent on public services – who are least accepting of immigration, the
strongest associations with attitudes to immigration are not with opinions about
its economic consequences but with responses to its cultural and social impact.